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Ron Baron Comments on Choice Hotels International

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Jul 29, 2020
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Choice Hotels International, Inc. (

CHH, Financial) is a global franchisor of economy and upscale hotels. Its share price increased 29.29% in the quarter. We believe Choice will be one of the first hotel companies to recover from the downturn due to its strong balance sheet and high leisure exposure, which represents two-thirds of its business. Industry experts forecast that the leisure segment will pick up first as travel resumes post-pandemic. We believe Choice’s exposure to drive-to markets and its lower-end chain will also contribute to its recovery. This is because its drive-to hotel markets should recover quickly. The company’s balance sheet remains strong with the financial flexibility to withstand a downturn. However, the stock still underperformed the Index given macro concerns about the lodging industry.

From

Ron Baron (Trades, Portfolio)'s Baron Focused Growth Fund second-quarter 2020 shareholder letter.

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